Tribune Publishing outlines plan to expand Los Angeles Times globally
Tribune Publishing CEO Justin Dearborn on Wednesday traced the contours of a business plan that would see the company's largest newspaper, the Los Angeles Times, expand to become a digital chronicle of entertainment capitals around the globe.
Tribune Publishing's brass is planning to bankroll seven new foreign news bureaus in "entertainment oriented" cities under the banner of the Los Angeles Times, Dearborn said in the company's first quarter earnings call with analysts.
The announcement came minutes after Tribune Publishing rejected an $815 million offer from Gannett that would have seen the newspaper publisher buy the Los Angeles Times, the Chicago Tribune, and nine of the company's major dailies.
The bureaus, to be established later this year, will be in Hong Kong, Seoul, Rio de Janiero, Mumbai, Lagos, Moscow and Mexico City. Dearborn and Chairman Michael Ferro have previously discussed, in more general terms, that they think the L.A. Times can be leveraged into a global brand with a worldwide audience.
As part of the initiative, Dearborn said, the Times and its expansion will be broken into a business unit separate from other Tribune Publishing newspapers. The point, he said, was to enable analysts and investors to track expected revenue growth as the initiative unfolds in future years.
Further details were not spelled out and analysts on the call did not ask about it.
A third business unit is being created Dearborn said, to be named Tronc — a British expression for pooling tip, or more generally, resources.
The idea, he said, will be to serve readers digital stories via "artificial intelligence," gather information about their reading preferences and then sell targeted advertising on a per click basis rather than the publishing norm of a cost per thousand impressions.
The occasion for the call was Tribune Publishing's quarterly earnings report, and the results, like those of other companies who have reported earlier, were not especially good.
Subtracting out revenue and earnings from the San Diego Union-Tribune, which Tribune Publishing did yet own in the first quarter of last year, total revenues were down 7.4 percent year to year, and advertising down 12.4 percent.
Even with the addition of the Union-Tribune, the company posted a $6 million net loss for the quarter.
Though Dearborn declined to take questions on the rejection this afternoon of Gannett's takeover bid, he addressed it by implication in the earnings press release:
We are at the very early stages of executing our clear plan to transform Tribune Publishing by increasing monetization of our important brands, capitalizing on the global potential of the LA Times, and significantly accelerating our conversion of content to revenue through an enhanced digital strategy. As we execute our plan, we are confident in our ability to deliver value for our shareholders.
And he added that the offer — a 60-plus premium on the company's trading price at the time, was so inadequate that it was "not a basis for further discussion."
Because of the late afternoon timing of the earnings report and the related announcements, markets will not be responding to the news until Thursday's opening bell.
While the promises of growth were speculative and the results even worse than the industry norm, investors will probably also consider whether that strengthens the case for Gannett's bid.
Correction: An earlier version of this post said the new Los Angeles Times bureau would not open until 2017. They will open later this year.